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Pelosi’s gamble could turn the risk of war into a reality

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The echoes of the visit to Taiwan by the US House of Representatives Speaker Nancy Pelosi, are still resonating. The visit, which is considered by some experts to be Pelosi’s “personal solo-show”, and by other experts to be a “part of Washington’s Asia-Pacific Strategy” has also sparked a massive controversy within the United States itself.

Beijing has already warned that it will take drastic countermeasures, considering Pelosi’s visit to Taiwan as a “violation of its national sovereignty and territorial integrity”. Even the Biden administration is known to have notified the possible risks of the visit to the Pelosi’s office. Despite this, this action from the Speaker of the US House of Representatives Pelosi, who refrained to step down from her plan, has drawn reactions as a part of its consequences that further escalated tensions in the Asia-Pacific, and was described as a “provocation” among the international community.

Following Nancy Pelosi’s visit to Taiwan, Beijing has announced to halt some of its dialogue partnerships and cooperation mechanisms with Washington as an immediate countermeasure. It was not only China that show a reaction to Pelosi’s visit. The Taiwanese policy of Nancy Pelosi, which insisted on taking this visit despite the notice from both the US Joint Chiefs of Staff and the Biden administration, has both created a controversy back in the US, and has made Washington’s Taiwan policy to be questioned once again. Washington’s controversial actions in Taiwan, despite its announcement of respect for the One-China policy, has led to criticism within the US public opinion.

‘Policy of Strategic Uncertainty’

According to a White House official who provided information about the internal negotiations anonymously to the Washington Post; Nearly all senior members of the Biden’s office of national security, have privately expressed deep concerns about this trip and the timing of it. Officials have summarized the possible outcomes of Pelosi’s visit directly to her office, and the Joint Chiefs of Staff Chairman Mark A. Milley has personally briefed Pelosi on this subject.

The article also states that Pelosi’s visit was independent of the White House and that nothing had changed in China-US relations, prior to this visit. However, Chinese leaders fear that visits to Taiwan by foreign state officials may potentially give Taiwan a diplomatic legitimacy as an independent country, and that they worry Pelosi’s visit may set an example by some other world leaders or officials. On the other hand, there are references to the upcoming National People’s Congress of the Chinese Communist Party, and Xi Jinping’s plans for a third term in leadership. And in the case of Washington’s policies on Taiwan, a policy of “strategic uncertainty” that neither supports nor opposes Taiwanese independence, is being reported.

Was it even worth it?

In the analysis article published in The Atlantic journal, Pelosi’s visit was described as a ‘gamble’ and was commented that “this Taiwan gamble strengthens the tendencies within US-China relations that can lead both countries towards conflict in East Asia”. It was reported that the policymakers in Washington see the country’s future being heavily dependent on Asia and are determined to expand the alliances in the region to consolidate US influence in Asia, and to bring China in check.

While it is stated that Taiwan is directly on the fault lines between the two rivaling powers and their geopolitical agendas, these agendas are summarized as follows; “For the United States, Taiwan is not only a long-term friend, but also an important economic partner and a link in the network of democracies that support the American influence in the Asia-Pacific. And for China, it is an indispensable component of the country’s ascension to a superpower status”.

The analysis expresses concerns that Pelosi’s visit to Taiwan could resonate far beyond the Taiwan Strait and even beyond East Asia, prompting Beijing to “intensify its efforts to thwart the US-backed global order” and for Xi Jinping to consolidate its anti-American pact with his Russian counterpart Vladimir Putin. It is argued that all this could cause a greater chaos in East Asia, and with China’s intensified military exercises around the island could turn into a conflict, thus further disrupting the already troubled global supply chains. Article referring to the possibility that Beijing will increase its pressures over Taiwan and perhaps even take the risk to go to war, and that the US and its allies may be dragged into a regional conflict, the article describes Pelosi’s visit as “a step in a process transforming a war over Taiwan from a remote possibility to a real risk that should worry the world.”

It is being reported that there are rough debates among the country’s public opinion over whether Pelosi’s visit was even “worth it”, in context of these possibilities which make the war much more probable. While it was given that realists who look at the situation with a “cold logic” agree that “it was not worth it”, while The Atlantic argues that “Pelosi’s persistence is necessary to show the Chinese and to the world that the United States does not take a step back”.

Salami slicing…

Bonnie Glaser, director of the Asia Program of the German Marshall Fund, points to the Biden administration’s inconsistency in its Taiwan policy, as one of the causes of this crisis, in a podcast of the Council on Foreign Relations (CFR), one of the institutions that shape the US foreign policies. Glaser stated that the US has a lack of clarity, consistency and even a lack of discipline in its stance on Taiwan, and that although Washington says it respects One-China Policy and does not support Taiwanese independence on paper, still acts much differently from this perspective. Glaser resembles this policy to a “salami slicing” strategy, and says China is well-aware of this tactic and therefore reacted strongly to Pelosi’s visit.

The only winner here is Pelosi

An expert on China at the Atlantic Council, a Washington-based think tank, Shirley Martey Hargis argues that this visit to Taiwan is not a strategically reliable decision since it will lead to a deterioration in the US-China relations, and in the relatively peaceful environment of East Asia. According to Shirley, there is only one long-term winner here: and that would be Pelosi herself. Saying that the visit has unnecessarily escalated tensions with China, Shirley also commented that it positions the United States in a two-front war, one front in Ukraine and one in Taiwan. Shirley says Taiwan “remains as a passive player in the US-China wrestling”.

A provocative action

The New Yorker journal has called Pelosi’s visit as “provocative politics”. The article, which argues that Pelosi’s initial aim was to provide a “small cheerleading”, while emphasizing that eventually the domestic politics of the US and China came into play and that Taiwan has gotten itself into a position of “a pawn caught in the middle”.

Noting that this action did not benefit Taiwan, but likely harmed Taiwan’s own security and “made US-China relations, which were already pretty bad, worse than they were before” the article also comments that “recovery may be much more difficult than we thought three weeks ago”

While it is argued that American politicians “have to be strategic and thoughtful about the cost and benefit of a particular action unless they actually want to drive the most important diplomatic relationship in the contemporary world into the ground”. It is stressed in the article that Pelosi’s solo-show also puts the Taiwanese government in a very difficult position.

This will make matters much worse

CNBC described the visit as “like pouring salt in an open wound for China”. Stephen Roach, a Yale University senior fellow and former Federal Reserve economist, has told CNBC that this visit to Taiwan has increased the US-China tensions and the risk of alienating these countries. “We are on a trajectory of escalating conflict, and this will certainly make matters worse,” Roach said, calling the visit a “new headache” for the Biden administration.

The economist Roach stated that this trip put China on the defensive and forced Beijing to show its determination to continue Taiwan’s eventual reunification with the mainland, while noting that he did not expect any overt military action from Beijing despite the current situation.

CNN channel also noted that Pelosi’s visit to Taiwan risks creating more instability between the United States and China. The analysts stated that this visit has sparked a harsh “rhetorical response” between the two countries, while also fueling fears in Washington that it would cause Beijing to “build an unprecedented escalation of the crisis in the Taiwan Strait”.

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Analysts warn new surge in Chinese exports threatens global markets

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11/09/2026

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Financial Times writer Ryan Avent has written that a fresh, rapid surge in China’s trade surplus could signal a new wave of the “China shock”.

Economists define the “China shock” as a spike in Chinese exports to global markets that intensifies competition for manufacturers in advanced economies and curtails employment in certain sectors.

The term gained widespread currency after China joined the World Trade Organization in 2001, accelerating the inflow of inexpensive Chinese goods into the US and other nations.

The US was the country hit hardest by the initial shockwave. Between 1999 and 2011, more than 2 million jobs were lost because domestic producers were unable to withstand the competition.

Avent argued that the effects of the initial wave are still felt across the American economy because China failed to carry out the rebalancing that the world expected.

The share of net exports in China’s gross domestic product contracted during the 2007-2019 period, allowing Western nations to focus on national security and other matters.

Avent reported that the trade surplus is now escalating rapidly once again, posing a threat to the economies of wealthy nations.

The writer pointed to the stagnation of domestic demand following the collapse of the real estate market six years ago as one cause of this surplus. Another prominent factor is the Beijing government’s channelling of massive resources into manufacturing in pursuit of self-sufficiency.

Attention was also drawn to the role of the depreciating yuan. An appreciation of the currency could require China to alter its foreign exchange interventions, reduce purchases of foreign currency and assets, and sell those assets off. That scenario could trigger currency depreciation and rising interest rates in other countries.

The Wall Street Journal also reported in the spring of 2024 on economists’ concerns regarding a potential second wave.

Experts predicted that global markets would once again be flooded with inexpensive goods, stating that China was manufacturing far beyond domestic demand to overcome its economic troubles.

Moreover, it was stressed that China is now competing in high-technology fields such as automobiles, computer chips, and complex machinery manufacturing.

Meanwhile, Vasiliy Kashin, Director of the Centre for Comprehensive European and International Studies at the Higher School of Economics (HSE) University in Moscow, told the Russian media outlet RBC that the US has imposed sanctions on the Chinese economy since the first shock period, adding that these measures would very likely tighten in the event of a fresh export wave.

According to assessments reported by the Financial Times, this new process could also shake China’s own economy. Alongside rising output, entry-level manufacturing plants across the country are turning toward automation and reducing personnel.

This trend could trigger a painful departure from labour-intensive production, leaving millions unemployed. Manufacturing activities in China that previously capitalised on cheap labour are shifting to other Southeast Asian countries.

The Beijing administration rejected allegations that its industrialisation steps pose risks to other countries. As reported by the Xinhua news agency, China’s Ministry of Commerce stressed that claims of a “China shock 2.0” are groundless. The ministry stated:

“The US and other Western countries have circulated the so-called ‘China shock 2.0’ narrative, asserting that China’s industrial development has shaken Western monopolies and narrowed growth space for Global South countries. This claim is unsupported by concrete data and is entirely unfounded.”

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Iran and China run secret barter network to bypass oil sanctions

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2 days ago

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10/09/2026

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Iran is operating a covert, barter-like trade mechanism to bypass sanctions on its oil sales and procure billions of dollars in goods from China, including military hardware.

Speaking to the Reuters news agency, two senior Iranian officials and three sources closely monitoring the matter said the Tehran administration receives credits for goods imported from China instead of cash in exchange for the oil it sells to the country.

The sources, who spoke on condition of anonymity, emphasised that this method of swapping oil revenues for Chinese goods provides an immediate financial lifeline to the Tehran government at a time when the US has intensified economic and military pressure over its nuclear programme.

China, the world’s largest crude importer, continues to access discounted Iranian oil through this arrangement while shielding its banks and exporting companies from the risk of international penalties.

Although the Washington administration has imposed sanctions on several small-scale Chinese entities facilitating the transport of Iranian oil, it avoids sweeping measures that could shake the global economy.

The US has stepped up its pressure as it seeks to reopen the Strait of Hormuz amid the ongoing war between the two countries.

US Treasury Secretary Scott Bessent said last month that countries failing to cut commercial ties with Tehran would risk exclusion from the dollar system.

It remains unclear how the barter mechanism has been affected by the US naval blockade imposed on Iran as part of the six-month-old war.

However, since the reimposition of the blockade on 14 July, no shipments of Iranian oil passing through the Strait of Hormuz to China have been recorded.

Beijing and Tehran, which describe Western unilateral sanctions as illegal, refrain from disclosing publicly how they sustain their trade.

Sources state that Tehran introduced this system to obtain pharmaceuticals, vehicles, and communications equipment. Chinese manufacturers are said to have no direct contact with Iran, and there is no indication that they are violating sanctions.

On the other hand, the mechanism was utilised at least once last year under contracts supplying Iran with millions of dollars’ worth of air defence equipment. The sources provided no details regarding the shipments in question, and the transactions were not independently verified.

The United Nations conventional arms embargo returned alongside other sanctions in September 2025 following the collapse of the 2015 nuclear agreement between Iran and world powers.

Tehran had withdrawn from the terms of the agreement, while Beijing and Tehran described the European nations’ automatic reimposition of sanctions as legally flawed.

Responding to questions from Reuters, the Chinese Ministry of Foreign Affairs stated that it had no knowledge of the trade structure in question.

Beijing stated that it opposes unilateral sanctions lacking United Nations Security Council authorisation and having no basis in international law.

Iran’s diplomatic missions in New York and Geneva remained silent on the inquiries. A US official speaking on behalf of the White House stated only that they are working with international partners, including the EU, to prevent Tehran from achieving its nuclear goals.

According to data analytics company Kpler, China purchased more than 80% of the crude oil exported by Iran in 2025. This share equates to an average of 1.4 million barrels per day.

Although the two countries signed a 25-year strategic partnership agreement in 2021 covering energy and infrastructure, the operational details of their cooperation remain largely confidential.

The model in question constitutes only one of the networks through which Iran procures goods and services from China without passing through international banking channels.

A Western official and two other individuals tracking the matter said that a buyer acting on behalf of state-owned Chinese oil company Zhuhai Zhenrong deposited hundreds of millions of dollars each month until this year into ChuXin, a shadow financial entity based in China.

These deposits reportedly represent payment for oil purchased from a Hong Kong-based company linked to the National Iranian Oil Company (NIOC).

Approximately 70% of the oil revenues routed through ChuXin is allocated to infrastructure projects in Iran. The remainder is transferred to the accounts of a special purpose vehicle (SPV) established to disburse payments to companies supplying goods to Iran.

Sources close to Iran’s decision-making apparatus confirm the existence of this financial mechanism.

Fund management is shared between a firm acting on behalf of the Chinese Ministry of Commerce and another entity linked to the Central Bank of Iran. When the Central Bank of Iran authorises importers, money transfers are directed to supplier firms. While the name ChuXin does not appear in official records, one source noted that the structure exists solely on balance sheets.

Andrea Ghiselli, an international politics specialist at the University of Exeter, stated that Beijing uses these indirect networks to demonstrate that it will not bow to US secondary sanction threats.

Highlighting that Chinese leaders aim to protect their own banks and firms from being pushed out of the global financial system, Ghiselli said: “They want to create deniability.”

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China leads $54bn capital injection into state banks and insurers

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07/09/2026

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China’s Ministry of Finance will lead a total capital injection of $54 billion into state-owned insurance companies and banks as part of a coordinated push to reinforce the capital structure across the country’s financial system, according to details disclosed by the institutions in statements on Sunday.

China Life Insurance (Group) Co, the country’s largest life insurer, will receive 35 billion yuan ($5.2 billion) in capital support, whilst China Taiping Insurance Group will receive 7 billion yuan.

In a separate announcement, People’s Insurance Company (Group) of China (PICC) said it plans to raise up to 15 billion yuan via a private placement of A-shares to the Ministry of Finance. The company stated that the proceeds will be used to replenish its capital.

The initiative could fortify the financial position of state insurers, which have been called upon to support the equity market with medium- and long-term funds. At the same time, it could position these institutions to help regulatory authorities manage smaller and higher-risk insurance companies.

Financial sector stability

China’s insurance industry has been contending with shrinking profitability caused by prolonged low interest rates. Solvency ratios across numerous small and medium-sized insurers have also deteriorated.

China Export and Credit Insurance Corp stated that the Ministry of Finance will inject 10 billion yuan to boost the company’s core capital. China Reinsurance (Group) announced that it will execute a capital increase of 3 billion yuan.

“The capital injection represents an important step for enhancing the financial sector’s capacity to serve the real economy and promoting high-quality development across the financial and insurance industries,” China Life said in a statement. The insurer added that the capital support will improve the group’s resilience to risks.

Taiping also noted that the funds provided will strengthen the company’s solvency and other core metrics.

Banks benefit from recapitalisation plan

Separately, three state banks announced on Sunday that they will receive capital support totalling 290 billion yuan.

The recapitalisation framework was first announced during the annual parliamentary meetings in March this year. The move broadens a funding mechanism deployed last year to strengthen the capital structures of several other major state-owned lenders.

Agricultural Bank of China and Industrial and Commercial Bank of China (ICBC), two of the country’s largest state-owned lenders, announced plans to raise up to 160 billion yuan and 100 billion yuan, respectively, through private placements of A-shares to the Ministry of Finance, China National Tobacco Corp, and affiliated entities.

Both lenders confirmed that all net proceeds will be deployed to replenish their Core Tier 1 capital. The measure is expected to help sustain credit expansion at a juncture when Beijing is increasingly relying on state lenders to support economic growth.

Weak credit demand remains a persistent headwind for the world’s second-largest economy, while continuing to erode profitability across the banking sector.

Export-Import Bank of China, one of the country’s three policy banks, stated that the Ministry of Finance will inject 30 billion yuan of capital into the institution, thereby bolstering its capital base.

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